HIGH FLYERS THINK TANK
Biotechnology and the future of Australian agriculture
The Shine Dome, Canberra, 26 July 2005
Opening address: Emerging technologies in biotechnology
by Dr Alan Finkel, Axon Instruments
I’ve been asked to speak today about emerging technologies in agricultural biotechnology, but obviously there are too many to discuss in detail. The list is endless: genetic markers to track the fate of newly engineered traits, microarrays to elucidate gene expression and genotypes, gene insertion to enhance flavor or to increase mineral retention, genetically engineered vaccines for foot-and-mouth disease, receptor mimic technology as an alternative to antibiotic treatments, and many more. These emerging uses go well beyond traditional agricultural applications, with some plants engineered to produce human vaccines against measles and others to produce hormones and monoclonal antibodies.
You are experts in the field and most of you will know much more than I do about the specifics of the numerous emerging agricultural biotechnologies. In fact, since I am not an expert in agricultural biotechnology I am going to talk today about something I actually know something about, which is strategies for selecting projects, whether they are in biotechnology or other fields. The challenge you face today and in the future is to optimise the process by which you decide which of the emerging biotechnologies will be worth your time and effort.
How can I help? My background is in the development of instrumentation and software tools that help biotechnology researchers achieve their goals. Ed Liu at the Genome Institute of Singapore recently wrote that the scientific method is underscored by the trinity of experimentation, theory and technology. My job for 25 years has been to help advance the technology branch of that trinity. Most scientific advances depend on breakthroughs in instrumentation and I am proud of the contribution to new instrumentation I have made in my career. When I founded Axon Instruments in 1983 I was the one and only design engineer responsible for all new product development. With the growth of the company, the coal-face engineering became the responsibility of others but even though I was the CEO I participated actively in our instrumentation development projects, with the result that I have been continuously responsible throughout my career for the development of new scientific instruments that enabled scientists to do novel discovery work in biotechnology and pharmaceutical drug discovery.
Regarding this activity I have a secret to disclose: I have to admit that I was always tempted to develop instruments that pandered to my love of technological toys rather than the specific needs of our scientist customers, but fortunately, in the main, I was constrained by my board of directors and fellow managers to concentrate on instruments that would actually be useful, that would maximally enable scientists to make progress in their discovery work, and therefore translate into robust sales for the company. Should I be ashamed that I allowed commercial considerations to influence my technology choices? Should I have doubts about my academic moral fibre for having let my intellectual interest be re-directed by financial goals? Not at all. There are so many technologies to choose from that making the choice based on more than one criterion is perfectly legitimate, so that if two projects are equally exciting it makes sense to choose the one that has the more obvious economic payback.
The challenges I faced building a global instrumentation company were universal challenges that scientists and engineers face all the time. They include being focused, obtaining adequate funding, being well informed, finding talented colleagues and selecting projects wisely. Of them all, I think that the toughest one to manage is project selection, the practice of which I like to call immaculate selection. In the United States, 66 per cent of start-up technology companies fail within 10 years. The reasons are many, but from my personal observation, one of the main reasons for failure, and this is very evident in Australia also, is that many of the startups emerged from academic laboratories too early, before they had shown that their technologies were not only novel, but were also useful, met customer demand, cost effectiveness and competitiveness. The important question is, how do the successful startups identify the right opportunity?
The first and most important consideration for immaculate selection is to avoid complacency. Too many labs and companies become comfortable continuing to do more of what they have already been doing for quite some time. It is essential to acknowledge that there is always a smarter and more rewarding way to proceed. If you are actively looking for the next big opportunity, everything else becomes a detail.
For example, my company, Axon Instruments, was stuck in a rut for much of the 1990s. By the early 1990s we had become the world’s pre-eminent supplier of electronic amplifiers and software for academic and pharmaceutical company researchers studying the electrical mechanisms in the body that underlie essential functions such as memory, learning, pain and muscle control. We captured more than 60 per cent of the world market in a mature field, which meant, quite literally, that we were never going to be able to double that business. What could we do? We had, in a previous, poorly resourced effort, developed some products to use fluorescence imaging to visualise calcium influx in neurons but we hadn’t worked out how to make those products commercially significant. So we set up an internal technology task force – a mini think tank of our own – attended on a monthly basis by half a dozen of our own employees and an expert from Stanford University. Through this process of deliberate investigation we identified an opportunity to adapt our fluorescence imaging skills to genomics, a completely new market for us. We made this effort the number one priority in the company, and within 2 years we became the largest supplier, worldwide, of laser scanners for DNA microarrays, giving our company a new lease on life, totally transforming it into a bigger, better known company with new products and new markets.
The second consideration for immaculate selection is to look for commercial significance. Whether you are working for profit or not for profit, make every ounce of effort count. In my field it takes as much work to develop a machine that has 5 million dollars sales potential as one that has 50 million dollars sales potential. So why do the former? The Australian government has made it abundantly clear that their preference is to fund research whose outcome will benefit the Australian economy. To be part of that imperative, you must choose science and technology that addresses commercially significant opportunities.
Our state governments are supportive of this effort. In fact, it seems like every state government in every state in the developed and the developing world has a goal to be one of the leading centres for biotechnology excellence. When the Governor of New York state committed over 1 billion US dollars to establish three centres of excellence, he said 'Companies across our State are poised to lead the nation in high-tech industries like biotechnology, computer miniaturization and fiber optic technology and we can help them.' Closer to home, the Victorian government’s declared aim is to make their state one of the top five biotechnology locations in the world by 2010. And the Queensland government’s goal is to create a biotechnology industry that will be globally competitive in niche areas of health, agriculture, environmental and industrial biotechnology.
Can all these states be winners? To some extent yes, since there are few overwhelming barriers to entry. In particular, it doesn’t cost a huge amount to establish an internationally competitive biotechnology effort. Contrast the establishment of a leading biotechnology lab with the establishment of a semiconductor manufacturing factory. A fabrication factory for a new microprocessor can cost as much as 4 billion Australian dollars. That’s one factory, at a single site, under a single roof. Think what a fantastic biotechnology research center you could set up for one hundredth that amount, for 40 million Australian dollars. With the generosity of government and for sums that are within reach of private equity investment it is possible for Australia to develop an increasingly significant impact in agricultural biotechnology. In Australia, we can further take advantage of the fact that we have ample local needs and rich biodiversity. Equally important, we can take advantage of our clever, well-trained scientists. But, ultimately, our success will depend on the brilliance with which our research efforts and commercial transformations are selected and implemented.
Such challenges are not unique to Australia. The 309 biotechnology companies listed on US stock exchanges last year collectively lost 4.2 billion US dollars on revenues of 47 billion dollars. But in previous years they did a lot worse so the good news is that the biotechnology industry is on an improving trajectory. The best news is that a handful of those companies – Amgen, Genentech, Gilead and Serono – are spectacularly profitable, as is Australia’s CSL. Why? Because they identified commercially significant opportunities and they executed their strategies brilliantly and with strong financial backing.
Another important requirement for immaculate project selection is to have just the right dose of healthy skepticism. Take an example in computing. From time to time you will hear references to breakthroughs in quantum computing, and scientific breakthroughs these definitely are, but if delivery of a product in the next 10 years is a criterion for deciding to put effort into a project then all of these breakthroughs are completely off base. Why? Because while those quantum computing technologies are making conceptual progress the semiconductor engineers at IBM and Intel are continuing to make one incremental practical enhancement after another, delivering commercially important improvements virtually every month. What I am saying is that management and engineers at IBM and Intel have selected wisely and invested in technology that is not only fascinating but also highly likely to deliver tangible benefits.
One more project selection criterion to consider is to play to one’s strengths, to take advantage of unique resources. Do we have any natural advantages in Australia besides being well educated and having our own unique agricultural biodiversity? In their own way, lots of other countries have these advantages, too. One thing we have in abundance that few other developed countries have is land, space to establish experimental farming plots. Suggesting that we give consideration to available space might be stating the obvious, but it is indeed something that we have more of than most other countries. Can we take advantage of it? In the drug development industry Australia has already established an international reputation as an excellent place to run clinical trials because of our well-reasoned regulatory environment, our excellent hospitals and our population mix. Could, by analogy, Australia become the best centre in the world for running agricultural biotechnology trials, taking advantage of our abundant land area to establish remote farming locations in which to run trials with better prevention of cross-contamination to neighbouring farms than might be possible in other countries? I noticed recently that in Indiana, in the US, a company named Controlled Pharming Ventures has established an agricultural test bed in a 25-hectare abandoned underground coal mine, to grow vaccine-producing corn, tomatoes and tobacco plants. The underground site is bug-free and storm-free and its managers hope that it will let them sidestep some of the regulatory oversights to which biopharming is usually subject. Clever, but obviously expensive to establish and expensive to run. Maybe, bolstered by appropriate regulatory oversight, we can routinely run such trials advantageously here in Australia. If this speculation isn’t practical, that’s okay, the important point is that somewhere there must be strengths for Australia to play to – it’s up to you to identify them.
Is it more difficult to identify promising technologies in biotech than the aforementioned semiconductor industry? I would argue that it is, because there are so many tempting biotechnologies to choose from and so many of them are at such an early stage that it is difficult to assess their prospects. As an electrical engineer, if you challenged me to develop a new electronic control system to maintain the separation between two vehicles on a highway I would immediately know that I would have to look at some kind of radar combined with high speed, microprocessor-based signal processing. But if I challenged you to produce a new form of cotton that would be as strong as steel could you tell me as confidently what the required technologies would be? Probably not, because of the extraordinary complexity of biology. In electronics we only have to overcome our own intellectual inadequacies. In biology, we have to overcome the complexity and adaptability of nature. Nature’s enormous head start over electrical engineering has led to the evolution of organisms that have unlimited ways to cope with external influences, whether these be well meaning or threatening. No matter how complex we might think a biological system is, in reality our understanding of its complexity is limited by our observational tools of the day, and every time we make those tools more penetrating we find that there is more to discover.
All the more challenge, all the more reason for a think tank such as this to use as many criteria as possible to make its project recommendations wisely. Today you will provide advice that will guide Australia’s agricultural biotechnology industry. That advice must be based on an absolute belief that there are better outcomes to be achieved than anything you have ever created before, and that advice must further rely upon multiple project selection criteria: scientific merit, novelty, feasibility and commercially significant potential, balanced by some healthy skepticism. Good luck and have fun.
